Energy, Gas, Latvia, Law and Regulations, Legislation

The Latvian Chamber of Commerce and Industry has proposed draft amendments to the Energy Law that would see the deadline for the separation of the transmission and storage entities moved from December 31, 2017 to December 31, 2019.

Referring to the experience of Lithuania and Estonia, the Latvian Chamber of Commerce and Industry said that it takes more than three years to complete the unbundling process. Moreover, in Lithuania and Estonia, only the transmission operators had to be unbundled from the national gas companies, while in Latvia's case the process also involves gas storage infrastructure. There are also concerns that it will not be possible to sell the unbundled assets for an adequate price and the existing shareholders might stake investment protection claims against the Latvian state.

The Latvian Chamber of Commerce and Industry also believes that the current "disproportionately short period of time" in which the unbundling has to be completed does not allow even interested investors to decide on purchasing the assets.

The business organization also says that the timeframe for the company's restructuring is too short.

Aivars Meija, an MP of the opposition For Latvia From the Heart party, has come up with similar proposals. He has suggested postponing the unbundling of Latvijas Gaze to December 31, 2018.

Latvian lawmakers at the end of October passed in the first reading draft amendments to the Energy Law providing for the opening of the Latvian gas market, which among other things includes the unbundling of Latvijas Gaze natural gas utility by separating gas distribution and sale from transmission and storage. The Latvian government adopted the draft amendments in September despite objections from Latvijas Gaze.

As reported, Latvijas Gaze will have to become two legally-independent companies by April 3, 2017, of which one will be in charge of the gas transmission and storage system, and the other will be responsible for natural gas distribution and sale, according to amendments to the Energy Law that the government approved in September.